Fast Answers

Online Investment Newsletters

Hundreds of online investment newsletters have appeared on the Internet in recent
years. Many offer investors free of charge seemingly unbiased information about featured
companies or recommend "stock picks of the month." While legitimate online
newsletters can help investors gather valuable information, some online newsletters are
tools for fraud.

Some companies pay the people who write online newsletters cash or securities to
"tout" or recommend their stocks. While this isn't illegal, the federal
securities laws require the newsletters to disclose who paid them, the amount, and the
type of payment. But many fraudsters fail to do so. Instead, they'll lie about the
payments they received, their independence, their so-called research, and their track
records. Their newsletters masquerade as sources of unbiased information, when in fact
they stand to profit handsomely if they convince investors to buy or sell particular
stocks.

Some online newsletters falsely claim to independently research the stocks they
profile. Others spread false information or promote worthless stocks. The most notorious
sometimes "scalp" the stocks they hype, driving up the price of the stock with
their baseless recommendations and then selling their own holdings at high prices and high
profits. To learn how to separate the good from the bad, read our tips for checking out newsletters.